Live news: US mortgage rates fall to 4-month low
The rate of US new home construction fell to a five-month low as higher mortgage rates weaken demand.
US housing starts in December fell 1.4 per cent month on month to an annualised pace of 1.38mn, the lowest level since July, the commerce department said on Thursday. That missed economists’ estimates for a more modest decline to 1.36mn.
The multifamily sector drove housing starts lower last month, falling 18.9 per cent from November. Single-family starts, however, increased for the first time in four months by 11.3 per cent.
Permits to build homes, considered a leading indicator of the market, fell 1.6 per cent from the previous month to an annualised pace of 1.3mn — the lowest level since May 2020 — and missing economists’ estimates for 1.37mn.
Single-family housing permits fell 6.5 per cent from November and 34.7 per cent from a year ago, but moderating mortgage rates may boost single-family permits in the coming months as housing affordability improves.
“Single-family permits tend to broadly track mortgage applications, which appear to be staging a — very modest — rebound in the wake of the decline in mortgage rates since late October,” said Kieran Clancy, senior US economist at Pantheon Macroeconomics.
The 30-year mortgage rate averaged 6.3 per cent last week, down from November’s peak of 7.08 per cent, according to Freddie Mac.
“The big picture here is that most of the downward adjustment in building applications in response to the collapse in demand since the end of 2021 is now over, though new home prices have much further to fall,” said Clancy.